``I think we have a problem,'' Mike Rose was told by the oil and gas company's controller. ``I need to put you on notice.''

The problem, in simple terms, was that accountants had used the wrong figures to calculate the worth of some of the company's U.S. energy properties. Anadarko, based in Houston, would have to restate its third-quarter results by writing off more than $1 billion after tax.

The company's stock, however, fell just a bit more than 1 percent on Wednesday, the day after the accounting error was disclosed to analysts, investors and the press. That's hardly a sneeze nowadays, when questionable accounting has become the scourge of the corporate world.

Thanks to the Enron Corp. fiasco, any whiff of trouble with a company's books can send its stock reeling. Shares of Tyco International Ltd. (NYSE:TYC - news) lost nearly 20 percent on Tuesday after it said it paid $20 million to an independent director and a charity of which he was a trustee. Behind that plunge were nagging concerns about Tyco's accounting.

PNC Financial Services Group (NYSE:PNC - news) and Williams Cos Inc. (NYSE:WMB - news) have also been hard hit by concerns about their accounting this week. Some contend Anadarko shouldn't be left off the hook for its mistakes.

``You don't make an error of that magnitude,'' said analyst Fadel Gheit, who follows Anadarko for Fahnestock & Co. ``It's like saying 'I don't remember how many children I have.'''

So how has Anadarko, the largest independent producer of oil and gas in the United States, avoided disaster?

``I guarantee there was a big strategy session in the company, with their investment bankers and lawyers, and they came up with the strategy to bite the bullet,'' said Gheit.

MEA CULPA

Anadarko has made the rounds since announcing the write-off late Tuesday. Hats in hand, executives have placed personal calls to analysts, granted interviews to the press and conducted a morning conference call with investors to apologize and explain the mistake.

Such tactics have been lost on other companies under fire.

Congressional committees, regulators and analysts are still pouring through Enron and Andersen documents to try to understand the energy company's bookkeeping. Tyco's chairman has publicly defended the questionable $20 million payment. And Kmart Corp. (NYSE:KM - news), which has filed for bankruptcy last week, stood silently as its stock and bonds collapsed.

By contrast, Rose said Anadarko is ``embarrassed'' by the mistake. ``There is no good explanation of why we had it,'' he said in an interview.

He later added: ``There is not adequate explanation of how there was an error that large.''

OWN UP TO ERRORS

Shortly after Rose first received a call about the mistake eight days ago, he informed the company's chairman and ``garnered the troops,'' he said.

Anadarko contacted its outside auditor, KPMG LLP, then conducted meetings of its board of directors and audit committee. Accountants started pouring over the numbers.

The problem centered on some U.S. oil and gas properties Anadarko acquired when it bought Union Pacific Resources in July 2000. Because oil and gas prices have recently dropped, the company had to write down the value of properties on its books. But in determining the write-down of the Union Pacific Resources properties, the company used the wrong tax basis.

Anadarko announced the problem late Tuesday in a press release which began by stating the company would correct financial results because on an error in figuring the value of the properties.

``We think that you need to be forthcoming and transparent in all your accounting, whether you had an error or not,'' said Rose. ``You never like these sorts of things, but you have to face an error when you have them.''

By the close of trade on Wednesday, Anadarko's stock had fallen 51 cents to $46.89 a share on the New York Stock Exchange.

Yahoo!

-- Anonymous, January 31, 2002